What Is the Compounding Error in Post-Boom Market Forecasts?

The compounding error is treating a market's boom-era peak as its new baseline and then applying a growth rate on top of it, which widens the gap between the forecast and reality with every year projected forward.

There is a specific trap in forecasting a market that has just been through a boom, and several of the largest Thailand cannabis projections walked straight into it.

How Does the Forecasting Error Actually Compound?

A forecast built during or just after a peak tends to treat that peak as the new baseline. It then applies a growth rate on top. If the peak was in fact a high water mark rather than a floor, the model is now compounding growth on a number that was already too high. Each year added to the projection widens the gap between the forecast and the market.

How Can You Test Any Long-Range CAGR Forecast?

This gives you a practical test for any long-range market number you are handed. Ask what year the base was set in, and what the market did after that year. If the base sits at a boom and the curve marches upward from there, treat the headline with real caution.

We rebuilt the trajectory from current conditions rather than from a past peak. The shape that produces is materially different from the confident upward lines still in circulation, and it changes how a serious entrant should think about timing.